November 10, 2011
A tightening US corn supply is being experienced partly due to rising Chinese demand and a cut in yields because of extreme weather, the USDA forecast on Wednesday (Nov 9).
With the fall harvest in its final stages, the Agriculture Department cuts its estimate of the corn crop by 1%, reflecting the lowest nationwide yield since 2003.
US corn stockpiles at the end of the marketing year would be the smallest in 16 years, meaning global markets will face a another year of razor-thin stocks.
Corn futures, which hit a three-week high on Tuesday, were expected to rise by US$0.03-0.05 a bushel when markets opened, according to traders in Chicago, with wheat up U$0.03-0.05 and soy down US$0.05-0.07. EU wheat futures were steady to slightly lower.
China, the No. two corn grower in the world behind the US, will import three million tonnes this year, up from its previous estimate of two million tonnes. USDA said the Chinese crop was 1% larger than previously forecast.
The downturn in the US crop will be offset by a small draw down in the stockpile and by smaller use of corn to feed broiler chickens for grocery-store sale.
Livestock producers of all types have complained about high and rising feed prices since 2006.
Rich Nelson, analyst at Allendale Inc, said it was a surprise to see the estimate of lower feed use -- "We had expected an increase in exports certainly based on our very aggressive pace we already have done right now for corn sales."
US corn exports are forecast for 1.6 billion bushels, lowest in eight years.
Although USDA lowered its estimate of the corn crop, it still would be the fourth largest on record at 12.31 billion bushels. The stockpile at the end of 2011/12 was forecast for 843 million bushels, a lean 6.7% stocks-to-use ratio. It was a larger end stocks figure than traders expected.
Thailand's rice production will be cut by 4.5% because of flooding, said USDA. Flooding also damaged the rice crop in Burma, Cambodia and Laos.
The US wheat crop is fractionally smaller than thought, USDA said after a special survey of the rain-delayed harvest in the northern Plains and Pacific Northwest. The spring wheat harvest was down 1.5% from the previous estimate.